Key takeaways
Currently Australia’s housing is so undersupplied that I've rarely encountered a supply-demand inflection point like this that requires such attention. And it’s only going to get worse.
Sure there are unknowns and risks ahead, but there are also five certainties for our housing markets:
1. Inflation is coming under control, but will stick around a little longer than the RBA would like
2. Interest rates will eventually fall, but propably not till early next year
3. The scarcity of dwellings for both purchase and rent will not go away any time soon.
4. Rents will keep rising
5. Astoundingly good demographics and strong population growth will keep fuelling demand for housing.
This creates a window of opportunity before falling interest rates create a property market reset.
While inflation has crept up a tad in the June quarter, it's likely that interest rates have peaked, and in due course consumer confidence will return and the markets will continue their upward trajectory.
Here are some trends to watch for over the balance of 2024:-
1. The recovery phase of the property market cycle will continue but the rate of growth will slow.
2. Our property markets will become more fragmented varying state by state.
3. Interest rate will fall eventually but now this may not happen until early next year.
4. Strong migration will continue to underpin our housing markets.
5. Rents will keep rising strongly.
6. Strategic investors will keep investing in the property market - investor finance is up 31% over the last year
7. Our economy will remain robust, and while the unemployment rate will rise the total number of Aussies employed will keep growing .
- What's the outlook for the Australian property markets for the rest of 2024?
- Have interest rates peaked now and when will they start coming down or will the RBA raise rates again in 2024 because of stubbornly high inflation?
- Will affordability issues cause a round of distressed sales and price falls or even a property market crash in 2024?
These are common questions people are asking now that the housing markets have experienced 18 months of rising values.
It is now clear that our housing market has defied the many doomsday forecasts and has moved through the bottom of the cyclical downturn early in 2023 experiencing a V-shaped recovery making the 2022 downturn one of the sharpest but shortest ones in history.
The price upturn is now firmly entrenched, rising for 18 months in a row and with home prices hitting fresh record highs in many markets .
Meanwhile, auction clearance rates are delivering consistent results showing the depth of our major capital city housing markets. Auction results and consumer sentiment have both shown a historically strong relationship with future housing trends.
Of course, each state is at its own stage of the property cycle and within each capital city there are multiple markets.
Capital city property markets have outpaced regional areas over the past year and this trend is likely to continue.
Prices in regional areas rose 0.5% over the month to be 7% above August 2023 levels.
Overall, persistently low supply relative to demand are supporting arising housing values despite high interest rates, ongoing cost of living pressures, worsening affordability pressures and a deeply pessimistic level of consumer confidence.
The gap between capital city house and unit values has widened substantially.
Capital city house values rose almost 3 times as much as unit values since the onset of Covid... but the gap is narrowing across most cities.
And after underperforming throughout the pandemic period, unit prices recorded stronger growth for much of 2023 and are still growing this year as affordability constraints will mean more Australians trade backyards for balconies and courtyards.
However the chart below shows the significant gap in property price growth between these two types of dwellings.
The good news is that this creates a window of opportunity, as one can now buy established family friendly apartments considerably below replacement cost.
Here's what the big four banks forecasting for property prices
- ANZ have recently revised their forecasts and expect capital city housing price growth to slow to 5.5% in 2025, but the state-by-state picture is quite varied. Price outcomes will continue to be largely driven by the gap between supply and demand.
- NAB have also recently updated their forecasts for 2025
You can always beat the averages.
While it’s likely that property price growth will be a little lower in 2025 than it was last few years, the good news is that if you don’t like the outlook for what property will do on a national level, you can always beat it by investing in the right property in the right location.
Now by that, I don’t mean look for the next hotspot.
I mean buying quality properties in locations that will outperform in the long term such as gentrifying suburbs.
You see...property offers countless opportunities to improve your results through your own time, skills and knowledge – so you don’t need to settle for average.
And there’s more to it than just location. You can add value through refurbishment, or redevelopment.
Oxford Economics recently made the following forecasts of where house prices will be in 3 years time.
How can values continue rising amid high interest rates?
Clearly affordability has decreased, but the housing markets are being underpinned by a number of factors:
- Wealthy buyers entering the market with higher deposits.
- Downsizers who had a lot of equity in their homes are buying debt free - in fact a third of properties last year were transacted with no mortgage at all.
- The bank of mum and dad and inheritances are helping many buyers with a deposit.
- Some buyers are buying in cheaper markets while others are buying units rather than houses.
- The property boom of 2020-21 left many homeowners with significant equity in their homes.
The latest housing market stats
Dwelling values have remained robust as CoreLogic's national Home Value Index rose 0.3% in October.
Here are the latest stats provided by CoreLogic for property price changes around Australia:
| City | Month | Quarter | Annual | Total return | Median value |
|---|---|---|---|---|---|
| Sydney | -0.1% | 0.1% | 3.7% | 6.9% | $1,193,240 |
| Melbourne | -0.2% | -1.8% | -1.9% | 1.8% | $778,926 |
| Brisbane | 0.7% | 2.4% | 13.0% | 17.6% | $883,357 |
| Adelaide | 1.1% | 3.7% | 15.0% | 19.4% | $808,644 |
| Perth | 1.4% | 4.1% | 22.6% | 28.1% | $804,621 |
| Hobart | 0.8% | -0.1% | -1.2% | 3.0% | $650,881 |
| Darwin | -1.0% | -1.3% | -0.1% | 6.6% | $492,692 |
| Canberra | -0.3% | -0.9% | 0.4% | 4.6% | $850,223 |
| Combined capitals | 0.2% | 0.8% | 5.9% | 9.9% | $895,429 |
| Combined regional | 0.6% | 1.1% | 6.3% | 11.0% | $643,302 |
| National | 0.3% | 0.9% | 6.0% | 10.2% | $809,849 |
Source: CoreLogic 1st November 2024
In fact, all the research houses reported higher dwelling prices in October 2024:
- CoreLogic’s national Home Value Index (HVI) recorded a 0.3% rise in October, marking 21 months of growth since the cycle commenced in February last year. Sydney’s drop in home values was the first month-on-month decline since January 2023, with the downturn driven by weaker conditions in the most expensive areas of the market.
- PropTrack reported national home prices hit a new record in October, rising 0.26% over the month. Australian home prices are now 5.62% higher than a year ago.
- Dr Andrew Wilson’s My Housing Market reported that the national capital city median house price increased again by 0.3% to $1,154,359 over October. The national quarterly house price has risen by 7.1% over the year ending October 2024 and is higher by 13.9% over the past two years.
We also keep track of “Asking Prices” as these are a good leading indicator for the property market because they reflect the sentiment of sellers and their expectations for the future value of their homes.
Sydney Property Asking Prices
| Property type | Price ($) | Weekly Change | Monthly Change % | Annual % change |
|---|---|---|---|---|
| All Houses | 1,957,017 | 7.218 | 1.1% | 5.1% |
| All Units | 831,917 | -6.517 | -1.2% | 7.7% |
| Combined | 1,501,059 | 1.652 | 0.5% | 5.4% |
Source: SQM Research, November 2024
Melbourne Property Asking Prices
| Property type | Price ($) | Weekly Change | Monthly Change % | Annual % change |
|---|---|---|---|---|
| All Houses | 1,249,117 | -0.747 | 0.0% | 3.6% |
| All Units | 611,736 | -0.536 | 0.0% | 3.6% |
| Combined | 1,048,804 | -0.681 | 0.0% | 3.2% |
Source: SQM Research, November 2024
Brisbane Property Asking Prices
| Property type | Price ($) | Weekly Change | Monthly Change % | Annual % change |
|---|---|---|---|---|
| All Houses | 1,182,371 | 0.082 | 0.3% | 16.2% |
| All Units | 671,313 | 2.887 | 1.1% | 23.7% |
| Combined | 1,054,572 | 0.783 | 0.4% | 17.2% |
Source: SQM Research, November 2024
Perth Property Asking Prices
| Property type | Price ($) | Weekly Change | Monthly Change % | Annual % change |
|---|---|---|---|---|
| All Houses | 1,091,271 | 8.418 | 2.4% | 25.5% |
| All Units | 584,463 | 3.932 | 2.3% | 28.1% |
| Combined | 958,909 | 7.247 | 2.4% | 25.7% |
Source: SQM Research, November 2024
Adelaide Property Asking Prices
| Property type | Price ($) | Weekly Change | Monthly Change % | Annual % change |
|---|---|---|---|---|
| All Houses | 942,907 | -3.455 | -1.4% | 15.5% |
| All Units | 479,328 | 6.072 | 3.3% | 9.4% |
| Combined | 859,641 | -1.744 | -1.0% | 14.9% |
Source: SQM Research, November 2024
Canberra Property Asking Prices
| Property type | Price ($) | Weekly Change | Monthly Change % | Annual % change |
|---|---|---|---|---|
| All Houses | 1,185,244 | 6.881 | 1.1% | 2.3% |
| All Units | 603,050 | 0.687 | 0.9% | 0.9% |
| Combined | 971,185 | 4.604 | 1.0% | 1.5% |
Source: SQM Research, November 2024
Darwin Property Asking Prices
| Property type | Price ($) | Weekly Change | Monthly Change % | Annual % change |
|---|---|---|---|---|
| All Houses | 690,536 | -1.536 | 2.0% | 0.3% |
| All Units | 381,569 | -1.569 | -1.0% | 1.3% |
| Combined | 569,273 | -1.549 | 1.2% | 0.5% |
Source: SQM Research, November 2024
Hobart Property Asking Prices
| Property type | Price ($) | Weekly Change | Monthly Change % | Annual % change |
|---|---|---|---|---|
| All Houses | 804,549 | -0.549 | 0.1% | 1.6% |
| All Units | 490,520 | 9.025 | 2.0% | -8.1% |
| Combined | 757,001 | 0.901 | 0.3% | 0.5% |
Source: SQM Research, November 2024
National Property Asking Prices
| Property type | Price ($) | Weekly Change | Monthly Change % | Annual % change |
|---|---|---|---|---|
| All Houses | 949,076 | -3.547 | -0.3% | 8.5% |
| All Units | 562,197 | -0.497 | -0.2% | 8.5% |
| Combined | 865,844 | -2.891 | -0.3% | 8.4% |
Source: SQM Research, November 2024
Capital Cities Property Asking Prices
| Property type | Price ($) | Weekly Change | Monthly Change % | Annual % change |
|---|---|---|---|---|
| All Houses | 1,414,428 | 1.860 | 0.6% | 8.5% |
| All Units | 702,995 | -3.114 | -0.8% | 9.0% |
| Combined | 1,203,863 | 0.388 | 0.3% | 8.3% |
Source: SQM Research, November 2024
The fundamentals of what drives Australian property prices
Property prices are driven by a combination of factors, and as we move through property cycles, they all come together to influence whether property values rise or fall.
In the medium term, property values will be linked to a range of factors that tend to boil down to two basic economic concepts: consumer confidence and supply and demand.
Understanding how these concepts work together to affect real estate is crucial to one’s understanding of what’s ahead for our housing markets.
On the other hand, if you look at what's ahead for housing markets over the next decade or two, and take a telescopic view, rather than a microscopic view, the two big factors driving our housing markets will be demographics (how many of us there are, have we want to live and where we want to live) and the wealth of the nation.
But first, let’s dig a bit deeper into the key underlying factors that will be influencing our property markets in the medium term.
1. Interest rates/affordability
While many people believe interest rates are a key driver of property values, and that's why there were so many pessimistic property forecasts as interest rates rose through 2022-23, our housing markets showed considerable resilience and kept rising in value despite the 13 interest rate rises the RBA threw at us.
Of course, falling interest rates and the subsequent increased affordability are strong drivers of property price growth, but the reverse isn't true.
House prices are driven by many other factors, not just interest rates.
However it is now clear that rates will remain high for longer as inflation remains stubbornly high and our economy and labour markets keep performing better than the RBA would like.
All four big bank economic teams now believe the next move from the RBA will be a 0.25 percentage point cut in February 2025.
Current big four bank cash rate forecasts
| Next RBA move | Total number of cuts forecasted | |
| CBA | -0.25% pts in Feb-25 | 4 cuts to 3.35% |
| Westpac | -0.25% pts in May-25 | 4 cuts to 3.35% |
| NAB | -0.25% pts in May-25 | 5 cuts to 3.10% |
| ANZ | -0.25% pts in Feb-25 | 3 cuts to 3.60% |
2. Supply and demand
Housing supply has a significant influence over house prices in the short term: an undersupply puts pressure on prices to rise while an oversupply does the opposite.
Despite very strong population growth, we’re just not building enough new dwellings, and this has put pressure on housing supply reflected in low rental vacancy rates and higher house prices.
At the same time, the strong absorption of new listings for sale has kept total listings in the market suppressed, intensifying competition between buyers.
These factors have created a sharp shortage of housing, outweighing the negative impact of rates on prices.
And there is no end in sight as building approvals (which are a good indication of future supply) are running at very low levels.
And just because a new apartment complex has been approved, it doesn't mean it will get built.
At the moment very few new complexes are coming out of the ground because it's not financially viable to build them at today's market prices.
Of course, this means future new developments will have to sell at prices considerably higher than today’s market value and this will, in turn, pull up the value of established apartments.
3. Consumer confidence
Consumer confidence is a critical factor affecting the direction of property prices.
We won't make big financial decisions like moving home or buying an investment property unless we feel confident about our economic future and our financial stability.
Consumer confidence has been at historic lows because of all the economic and socio-political issues that have confronted us.
I believe that during 2025 consumer confidence will rise as inflation comes under control and interest rates eventually fall.
At the same time, the “wealth effect” a very improving economy and rising property values will lead to further consumer confidence and bring home buyers and sellers back into the market.
4. Economic climate
Another key factor that affects the value of the property market is the overall health of the economy.
This is generally measured by economic indicators such as the gross domestic product (GDP), employment data, manufacturing activity, the prices of goods, etc.
Broadly speaking, the economy is strong and the RBA is trying to slow it down to bring inflation under control, but currently, everybody who wants a job can get a job and this will underpin our housing markets even if the economy falters a little moving forward.
5. Population growth
Australia has experienced a record-breaking rate of net overseas migration, estimated to have reached around 500,000 people in the 12 months to September 2023.
While population growth has always been a key driver supporting our property markets, the influx has pushed our supply/demand balance off-kilter and is key to the increase in housing prices and the shortage of rental properties.
6. Availability of credit
When the credit (the ability to borrow from the banks) is readily accessible, with lower interest rates and less stringent lending criteria, it tends to stimulate the housing market since more people find themselves able to borrow money to buy homes, leading to increased demand for housing.
On the flip side, when credit is tightened through higher interest rates or stricter lending criteria (as happened when APRA made the banks tighten the purse strings in 2016-7), the effect can be a cooling of the housing market.
Such measures are usually a deliberate policy response to an overheated market, aiming to reduce the risk of a “property bubble” and subsequent crash.
7. Investor Sentiment
This sentiment, essentially the collective attitude and outlook of investors towards property markets, can significantly influence both the demand for and the value of real estate.
Investors generally account for around one-third of all property transactions so positive investor sentiment can drive up property prices, especially in sought-after areas.
Conversely, negative investor sentiment, as occurred during the market downturn of 2022, can lead to a decrease in property values.
If investors believe that property prices will stagnate or fall, they may be less inclined to invest, or they might choose to sell off their properties, increasing supply in the market.
8. Government incentives
Government incentives can have both direct and indirect impacts on the real estate sector.
One of the most direct ways government incentives affect property values is through policies aimed at stimulating demand.
For instance, initiatives like the First Home Owner Grant (FHOG) or stamp duty concessions for first-time buyers directly increase buying capacity, leading to greater demand for property.
Another aspect is the development incentives provided by the government to promote specific types of property development, such as high-density housing or urban renewal projects.
These incentives can increase property values in targeted areas by improving infrastructure, accessibility, and community facilities, making them more desirable places to live.
Tax policies and regulations also play a crucial role.
Negative gearing can increase demand for investment properties, pushing up prices.
And every time there is talk about removing negative gearing or amending taxes including land tax, investors shy away from our housing markets.
Australian housing market predictions for 2025
The last few years have shown us how hard it is to forecast property trends, and as always there will be headwinds and tailwinds buffeting our property markets.
Currently Australia’s housing is so undersupplied that I've rarely encountered a supply-demand inflection point like this that requires such attention.
And it’s only going to get worse.
Drivers of property price growth in 2025 will include:
- Continued strong population growth at a time when we are not producing enough supply of new dwellings. This extreme shortfall will exert upward pressure on house prices and rents throughout 2025.
- I anticipate that interest rates will fall in the first few months of 2025 and at some stage next year it is likely APRA will relax its mortgage serviceability buffer. This is currently at 3% and the combination of these factors will increase borrowing capacity.
- FOMO (fear of missing out) will creep in as buyers realise all the price falls of 2022 have now been made up and the media will keep mentioning new record prices being achieved.
Headwinds:
- Stretched affordability will remain an issue in 2025, however, buyers will want to get on with their lives and therefore choose townhouses or apartments over homes or move to more affordable suburbs.
- The RBA wants to lift unemployment to help slow inflation. Financial uncertainty and worries about job security will stop some buyers from making important decisions like buying a home or an investment property.
- Poor consumer sentiment was a feature of much of the last few years, holding back property buying decisions, and until there is more certainty about our economy and confidence that interest rates have peaked and inflation is under control, it's likely that consumer confidence will remain low until interest rates start falling.
The strongest performers are likely to be Brisbane and Perth, where population growth is expected to outpace supply more than in other cities.
With the increase in value of houses strongly outpacing the apartment market recently, now with the differential in price between units and houses at the highest level on record, and with houses becoming more unaffordable for many, I can see strong capital growth ahead for family-friendly apartments in great neighbourhoods.
8 economic and property trends to watch out for moving forward
1. The recovery phase of the market will continue in 2025
Property price growth will continue throughout 2025, albeit at a much lower rate and our housing markets will be fragmented as affordability will affect many homebuyers.
2. Interest rates will fall
When interest rates eventually fall in the first part of 2025 it is likely to encourage greater housing investment and more homebuyers.
3. Our property market will be even more fragmented
Of course, there was really never one Sydney property market or one Melbourne property market.
There are markets within markets – there are houses, apartments, townhouses and villa units located in the outer suburbs, middle ring suburbs, inner suburbs and the CBD, and they're all behaving differently.
But our markets will be much more fragmented moving forward as some demographics struggle with cost-of-living, rent and mortgage cost increases (at a time of low wage growth) more than others.
It will either stop them from getting into the property markets or severely restrict their borrowing capacity which will negatively impact the lower end of the property markets.
Meanwhile, many first-home buyers who borrowed to their full capacity will have difficulty keeping up with their mortgage payments at the time of rising interest rates or when their fixed-rate loans convert to variable rates.
In other words, there will be little impetus for capital growth at the lower end of the property market.
That's why I would only invest in areas where the locals’ income is growing faster than the national average - such as gentrifying suburbs - as locals will have higher disposable incomes and be able to and are likely to be prepared to pay a premium to live in these locations.
Many of these locations are the inner and middle-ring suburbs of our capital cities which are gentrifying as these wealthier cohorts move in.
At the same time, I see well-located properties in our capital cities outperforming regional property markets.
In fact our capital cities outperformed regional housing markets over the last year or so.
In the past one of regional Australia's allure was its affordability compared to capital cities.
However, the surge in prices over the COVID lockdowns narrowed the price gap and this diminishing affordability undermines one of the key advantages regional markets had over metropolitan counterparts.
The measure of years to save a 20% deposit for the median regional home on a median regional income has risen from 7.4 years in early 2020 to 9.7 years, as opposed to 10.0 years for capital cities.
4. Migration
Net overseas migration to Australia will remain strong in 2025, however, the Federal government will lower the rate of temporary migrants coming to Australia and is planning to reduce international student intake to Australia.
However, the influx of immigrants will keep driving rental growth as migrants tend to rent.
Only 38% of migrants own a home after being in Australia for five years, yet 71% of migrants own their home after 10 years.
5. Rents will keep rising
There is no end in sight for our rental crisis and rent prices will continue skyrocketing into 2024.
In fact, increased rental demand at a time of very low vacancy rates will see rentals continue to rise throughout the next few years.
6. Strategic investors will keep entering the property market
And they’ll squeeze out first-home buyers.
As rents continue to rise and the share of first-home buyers continues dropping, strategic investors with a realistic long-term focus will return to the market.
7. Neighbourhood will be more important than ever
In our post Covid world, people will pay a premium for the ability to work, live and play within a 20-minute drive, bike ride or walk from home.
Many inner suburbs of Australia’s capital cities and parts of their middle suburbs already meet the 20-minute neighbourhood tests, but very few outer suburbs do because there is a lower developmental density, less diversity in its community, and less access to public transport.
And ‘neighbourhood’ is important for property investors too, and here’s why.
In short, it’s all to do with capital growth, and we all know capital growth is critical for investment success, or just to create more stored wealth in the value of your home.
This is key because we know that 80% of a property’s performance is dependent on the location and its neighbourhood – in fact, some locations have even outperformed others by 50-100% over the past decade.
And it’s likely that moving forward, thanks to the current environment, people will place an even greater emphasis on neighbourhood and inner and middle-ring suburbs where more affluent occupants and tenants will be living.
These ‘liveable’ neighbourhoods with close amenities are where capital growth will outperform.
What sets these neighbourhoods apart is the demographics – these locations are generally gentrifying or are lifestyle locations and destination locations that aspirational and affluent people want to live in.
So lifestyle and destination suburbs where there is a wide range of amenities within a 20-minute walk or drive are likely to outperform in the future, fetching premium prices in 2024.
8. Our economy and employment will remain robust
Sure the RBA continues in its efforts to slow down our spending a little in order to bring down inflation.
But despite this our economy will keep growing (albeit a little slower) and the unemployment rate will remain low thanks to the many new jobs created as our economy grows.
Local Capital Cities Market Predictions for 2025
As we know, there is not one Australian housing market, but markets within those markets, and again within those.
As interest rates fall over the next year or two, confidence will return, and buyers will return to the property markets.
However, affordability will still be an issue for many potential buyers, and buyers will only be able to pay up to the limit of what they can afford, so I would only invest in locations where wages are increasing faster than average, and residents have multiple streams of income, not just wages.
This means the more affluent inner-ring suburbs and the gentrifying middle-ring suburbs of our capital cities will outperform the cheaper suburbs, where residents will still find it difficult to afford to buy a home.
Melbourne housing values have languished over the past few years in part due to greater buyer choice and higher property taxes.
Additionally, construction activity has aligned more closely with population growth over the past decade.
Melbourne ranked as the fourth most expensive capital in October, down from second place after a recent underperformance and it remains to be seen if October marks a turning point as buyers take advantage of Melbourne’s relative value.
However, this creates a window of opportunity for strategic property investors as Melbourne property values have significant upside potential.
At Metropole Melbourne, we’re finding that on-the-ground sentiment has changed and strategic investors and homebuyers are accepting that inflation has probably peaked and that interest rates are likely to peak in the next few months, so they are getting on with property decisions.
While more buyers are active in the market, there is currently a shortage of good quality stock on the market - while house prices have been resilient, Melbourne rental rates are experiencing weaker conditions due to a higher supply of rental properties, and less demand.
Sydney’s housing values slipped back a little in October, with prices 5.04% higher than October 2023.
The increase in properties hitting the market in Sydney this year has been met with strong demand, but is a contributor to slowing price growth, along with affordability constraints and sustained high interest rates.
The Brisbane’s housing market lifted 0.7% in October to reach a new peak, although the pace of growth eased in Brisbane.
Despite slowing growth, Brisbane remained one of the strongest performing markets over the past year with home prices sitting 13% above October 2023 levels.
Our on-the-ground experience at Metropole Brisbane shows that there is emerging strong demand from both home buyers and property investors for A-grade homes and investment-grade properties.
Perth’s housing values - Perth proceeded to lead the country with the strongest annual home price growth (+22.6) in October as tight supply amid strong buyer demand saw competitive conditions fuel strong price growth.
However today, buying in such a market means you are likely buying near the peak of the market.
I would be cautious about buying in many of the cheaper Perth suburbs where investors are buying at the current prices because they’ve run ahead of the broader market.
Once investor demand from the East Coast slows down, these areas are going to weaken first.
The smart money would have been there 2-3 years ago – and is now focused on other states that are early in the growth cycle.
Adelaide’s housing values -Adelaide remained one of the country’s top performing markets in October, with home prices rising 1.1% to a new peak.
Adelaide prices are now up 19.4% year-on-year. Low stock levels intensified competition, and while the number of properties hitting the market has increased, total stock on market remains constrained as new listings are quickly absorbed amid strong buyer demand.
Canberra’s property prices fell -0.3% over the month to sit 0.4% above October 2023 levels.
This leaves prices 5.42% below their March 2022 peak.
Hobart’s housing values
Prices in Hobart rose 0.8%, sitting -1.2% below October 2023 levels. .
Long-term forecasts for Australian property markets (2025-2030)
Over the next decade, demand for housing is expected to benefit from the triple boost of rising population, rising jobs, and rising income.
Collectively this wealth effect will add around $860 billion of income over the next decade, a significant portion of which is likely could be directed towards housing.
The average Australian tend to spend 13% to 20% of their income and either rent or mortgage servicing.
Of course, no matter how many times you forecast property prices, it will always be difficult to predict exactly where property markets and prices will be in three months' time, let alone 6-7 years into the future.
After all, history shows us that some properties will outperform others by 50-100% in terms of capital growth, so strategic property investors who buy investment-grade properties could expect to see the value of their properties more than double within the next seven to 10 years.
So we always have to take forecasts for Australian property markets with a big pinch of salt.
But what I am confident we’ll see for our future property markets comes off the back of our strong projected population increase.
- Also read:Everything you need to know about the state of Australia’s property markets in 20 charts – November 2024
- Also read:This week’s Australian Property Market Update – Latest Data, State by State November 19th 2024
- Also read:Melbourne property market forecast for 2025
- Also read:Sydney property market forecast for 2025
- Also read:Brisbane’s property market forecast for 2025
Currently, there are about 27.6 million Australians and Australia's population is forecast to rise to over 30 million people by 2030.
This means close to 3 million more people will need somewhere to live and this will underpin our property markets.
What we predict for Australia’s property market is that there will be many more high-rise towers of apartments, not just in the CBD but in our middle-ring suburbs.
In fact, we are already starting to see this, particularly in Melbourne and Sydney.
And we also expect there will be lots more medium-density housing – in particular townhouses will be a popular way to live with modern large accommodation on more compact blocks of land.
So what about property prices for 2025-2030?
Some economists predict a 40-50% growth in Australia's house prices between now and 2030.
This isn’t surprising because it’s often said that over the long term, the average annual growth rate for well-located capital city properties is about 7% (and we know that prices have risen 6.8% per annum over the past 30 years), which would mean, in general, well-located properties should double in value every 7-10 years.
That would put Australia’s median dwelling price at around $1.1 million in 2030.
